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New Type of Title Deeds

This legal article was published by Narit Direkwattanachai in regards to Thailand’s Revenue Department’s treatment of indirect payments to a shareholder as constructive dividend. 

The Department of Land recently introduces a new type of title deeds whose English translations are provided at the end of this writing. The department introduces these new title deeds (one for a land plot and another one for a condominium unit) to evidence a new type of lease (the “New Lease”) under the Rights Deriving Property Act, B.E. 2562 (2019) (the “New Lease Act”). In a Thai language, this New Lease Act means the Act relating to a property being a derivative of rights. This New Lease is introduced to deal with inherent limitations of a traditional lease under the Civil and Commercial Code (the “Traditional Lease”). As the New Lease Act has addressed and largely eliminated those inherent limitations of the Traditional Lease, as far as a lessee is concerned the New Lease is better than the Traditional Lease.

Note on the Lease of Immovable Property for Commercial and Industrial Uses Act, B.E. 2542 (1999)

It is no secret that businesses and practitioners have some reservations with the limitations of the Traditional Lease for a long time. These limitations arise largely from the precedents/interpretations of the Supreme Court Judgments. Prior to the New Lease Act, the Lease of Immovable Property for Commercial and Industrial Uses Act, B.E. 2542 (1999) (the “Industrial Lease Act”), which came into force in an aftermath of a 1997 Asian financial crisis that got started in Thailand, has addressed those limitations of the Traditional Lease by introducing another type of lease, a commercial and industrial under the Industrial Lease Act (the “Industrial and Commercial Lease”). However, due to a zoning limitation, the Industrial and Commercial Lease has not been widely used. In many ways, this New Lease Act is modeled after the Industrial Lease Act.

As a result of these improvements in the New Lease Act, everything else being equal the economic value of the New Lease is greater than the economic value of the Traditional Lease of the same period.

To see the Certificate of Rights Deriving Property for Land and Certificate of Rights Deriving Property for Condominium Unit, click here.

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